Indigo Paints IPO is going live on 20-Jan-2021 to 22-Jan-2021, This is the second IPO in January 2021, after IRFC IPO got open for subscription. Indigo Paints Limited is engaged in manufacturing different types of decorative paints like enamels, emulsions, wood coatings, primers, distempers, putties, and cement paints.
Indigo Paints is one of the fastest-growing paint companies in India and in terms of revenue, it is the 5th largest company in the decorative paint industry.
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Indigo Paints, Rs 1,170.16 crore initial public offer will open for subscription on Wednesday i.e. 20-Jan-2021 in the price band of Rs 1,488-1,490 per share. The IPO comprises fresh issuance of stocks aggregating to Rs 300 crore and an offer-for-sale of up to 58,40,000 equity shares by private equity firm Sequoia Capital through its two funds, SCI Investments IV and SCI Investments V and promoter Hemant Jalan.
In this post we will not only know about all the details related to Indigo Paints IPO, such as Issue size, Issue type, Bid lot, price range, issue date, Cut-off timings but also about the financials step by step.
So, Let us first start by knowing in brief about Indigo Paints Limited.
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About Indigo Paints Limited (IPL):
Started in the year 2000, 28 March at Pune, Indigo Paints had a modest beginning. It started out with the manufacture of lower-end Cement paints, and gradually expanded its range to cover most segments of water-based paints like Exterior Emulsions, Interior Emulsions, Distempers, Primers, etc. From an early age, the Company spread its footprints across the country, with the rapid expansion of its reach across India.
Today the Company stands out as one of the strongest contenders in the Indian paint industry, being rated as an innovative paint manufacturer, which keeps coming out with unique products never before offered in the country.
The paintmaker had a distribution network in 27 states and 7 UT, at the end of September quarter. Indigo Paints has a better growth potential due to its lower base and market share as it mostly deals in Tier 1, Tier 2, and Metros.
Indigo Paints Limited has 3 manufacturing facilities situated in Jodhpur (Rajasthan), Kochi (Kerala), and Pudukkottai (Tamil Nadu). MS Dhoni is the IPL (Indigo Paints Limited) brand ambassador.
Operating from just 3 factories, Indigo paints limited has an estimated production capacity of 101,903 kilo liters per annum (KLPA) for liquid paints, and 93,118 metric tonnes per annum (MTPA) for putties and powder paints. It is further looking to expand its manufacturing capacities at Pudukkottai to manufacture water-based paints with an production capacity of 50,000 KLPA.
Let us now move on to knowing the most important factor that is, the financials of Indigo Paints Limited.
Financials Of Indigo Paints Limited (IPL):
In FY20 Indigo Paints has a distribution network of 36 depots with 11,230 active dealers and 4,269 tinting machines.
The most important thing before applying for an IPO is to know the financial condition of a company, let us know how IPL as a company stand. Checkout the image below to know:
The financial performance of Indigo Paints over the last four years highlights significant growth. From 2005 to 2020, revenue from operation has grown at a CAGR of 37%. Whereas in last 4 years the total income of the company showed growth at a CAGR of 21.30%.
As you can see in the image above, The long-term debt of Indigo Paints have also dropped significantly from FY 19, to FY20 making it more financially strong for long term.
Indigo Paints Limited (IPL) Peers Comparison:
Indigo Paints may be not new in the paint industry, but there are many other good companies belonging to the same industry, therefore it will be quite helpful for you as an investor to know the comparison of IPL with it’s peers.
Check out the below image to know Indigo paints P/E ratio (Price to Earning), ROE (Return on Equity), P/Bv (price to book ratio), PAT Margin (Profit after Tax margin), Return on capital employed (ROCE), Return on Net Worth (RONW) , Total Income, Value and Dealers network details.
As you can see, the company needs to work more dealers networking, moreover the P/E ratio is little high but on the good side Indigo paints ROE, and ROCE is much better than its peers. Overall the valuations are little expensive for a company of this size.
Apart from these they spend a lot on their branding and promotion, for example in FY20, Indigo Paints spend around 12.65% spending of revenue. On the other hand the top 4 peers in the same industry last year spend around 3.3 -3.5% only.
Having said that, One day before the Indigo paints IPO opening, Indigo Paints shares were trading with a 54.36 per cent premium over the IPO price in the grey market price (GMP) today. The shares of the fifth-largest company in the paint industry were trading at Rs 2,300, up Rs 810 from the issue price.
Now, Let us move on to the Indigo Paints IPO and know everything in detail.
Indigo Paints IPO Details:
Objects of the Issue:
The net proceed from the Indigo Paints IPO will be used against following objectives.
To meet the capital expenditure requirements for manufacturing facility expansion at Pudukkottai, Tamil Nadu
To purchase tinting machines and gyro shakers.
To repay all or certain borrowings.
To meet general corporate purposes.
The Issue Size Initial Public Offer Of Up To Equity Shares Comprising A Fresh Issue Of Up To Equity Shares Aggregating To Rs 3,000 Million and an Offer For Sale Of Up To 5,840,000 Equity Shares.
Frequently Asked Question (FAQ):
1.What Is The Symbol For Indigo Paints Limited?
Ans: The Symbol for Indigo Paints is INDIGOPNTS.
2.When Indigo Paints IPO Coming?
Ans: The Issue Period for Indigo Paints IPO is 20-Jan-2021 to 22-Jan-2021.
3. Post Modification Period For Indigo Paints IPO?
Ans: The Post issue Modification Period for IPO is 21-Jan-2021 (10.00 A.M. to 11.00 A.M.).
4. What Is The Cut-off Time Period For UPI Mandate For Indigo Paints IPO?
Ans: The Cut-off time for UPI Mandate Confirmation is 25-Jan-2021(upto 12:00 PM).
5. What Is The Issue Type For Indigo Paints IPO?
Ans: The Issue Type is 100% Book Building.
6.What Is The Price Band For Indigo Paints IPO?
Ans: The Price (Band) Range for Indigo Paints IPO is Rs.1488 to Rs. 1490.
7. What Is The Lot Size For Indigo Paints IPO?
Ans: The Bid Lot i.e. Minimum Order Quantity (lot size) for Indigo Paints IPO is of 10 Equity Shares and in multiples thereof 10 Equity Shares.
8. Who Are The Book Running Lead Managers For Indigo Paints IPO?
Ans: The Book Running Lead Managers are, Kotak Mahindra Capital Company Limited, Edelweiss Financial Services Limited and ICICI Securities Limited.
9. What Is The Face Value For Indigo Paints IPO?
Ans: The Face Value is of Rs. 10 whereas The Tick Size is of Rs.1
10. What Is The IPO Market Timings For Indigo Paints IPO?
Ans: The IPO Market Timings is 10.00 a.m. to 5.00 p.m.
Apart from above points:
The Maximum Subscription Amount for Retail Investor is Rs. 2,00,000
The Maximum Subscription Amount for Eligible Employee is Rs. 5,00,000
The Discount of Rs.148/– per Equity Share for Eligible Employees.
The Tick Size is of Rs.1
The Name of the Registrar is Link Intime India Private Limited.
The Address of the Registrar is C-101, First Floor, 247 Park, Lal Bahadur Shastri Marg, Vikhroli (West), Mumbai 400 083
The Contact person name number and Email id is – Shanti Gopalkrishnan , +91 22 49186200 indigopaints.ipo@linkintime.co.in
Indigo Paints Limited Shareholding Pattern (%):
The majority of share holding of Indigo Paints is with Hemant Jalan (22.7%) and Anita Jalan (15.34%) respectively.
Below are some of the investment tips before applying to Indigo paints IPO.
Important Things To Keep In Mind Before Applying For IPO’s:
- Try to fill for the same IPO online from different DP ID i.e. if in your family have more than 1 account you can possibly get the allocation done in case of over subscription.
- You should have a good knowledge of the sector and the company you are planning to invest.
- Analysis of the company’s balance sheet is very crucial. A clear understanding of the company’s future projects and vision is very necessary to know whether it will have a sustainable future.
- Investment decision has to be taken carefully and not in a hurry.
- Read as much as you can about the company, its objectives for launching the IPO, its past history in business and its futures prospectus.
- Don’t go for hype in the news, your analysis should be based on facts rather than gossips and rumors.
- Many IPOs are oversubscribed. What this means is that the demand for shares is much higher than the shares available for sale. In such a situation, it is no surprise that many investors fail to get any shares allotted to them. This is why it is advisable to apply for IPO shares on the last day of bidding. This way, one can have a good estimate on how large the subscription will be. Also, in that case, one should bid for just one lot and not unnecessarily lock up their capital.
Conclusion:
The prospectus of the company does look promising, having said that there are always risk associated while investing in equity. Similarly there are certain risk which may effect the company overall, for example:
- The continuing impact of the COVID-19 pandemic on business and operations is uncertain and it may be
significant and continue to have an adverse effect on business, operations and future financial
performance. - IPL engage in a highly competitive business and any failure to effectively compete could have a material adverse effect as well.
- IPL ability to grow their business depends on relationships with dealers, community of painters, and
any adverse changes in these relationships, or inability to enter into new relationships, could negatively affect
business and results of operations. - Under-utilization of manufacturing capacities and an inability to effectively utilize expanded
manufacturing capacities could also have an adverse effect on business, future prospects and future financial
performance. - A significant portion of IPL sales are derived from the state of Kerala and any adverse developments in this market could adversely affect their business.
Therefore, it is always advisable to go through Indigo Paints Limited – DRHP to know in detail about the company.
Applying for Indigo Paints IPO is quite simple, you just need to check with your broker as most of the stock broker in India provide you the platform to apply directly through their portal instead of ASBA process or from bank.
The only thing which should be bothering you is the research you did before applying for the IPO. Investing in IPO is risky as well as profitable. Having said that you also need to keep in mind important things mentioned above before applying to IPO’s as the risk is always involved.
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Note: Please do your own research and make investment. Moneycontain will not be responsible for any of your losses at all. The point made is for educational purpose only and intended to give information. All investments are subject to risks, which should be considered prior to making any investments. The above details are compiled from information available on public platforms. These are not buy or sell recommendations.
